Idea Final

Presented by:-Chandrasekhar Purkasthya(75)Debolina Bhattacharjee(74)

Left out• Share holding pattern,• Sales/profit of five year• Paid up capital• Headquaters• Why we have chosen idea(only the question

answer we will tell)• Strategy evaluation• Make some editing in Introduction

• Make over of ppt

IDEA CELLULAR LTD

IDEA Cellular is a leading GSM mobile services operator in India with 67 million subscribers, under brand IDEA. It is a pan India integrated GSM operator covering the entire telephony landscape of the country. IDEA Cellular is a publicly listed company.

.

Mission “We will delight our customers while meeting their individual communication need

sanytime , anywhere.”

Our suggested vision

• Vision: • "To take India in the world scenario of Tele-

Communication sector, keeping Indian values at the same time meeting the communication needs of emerging India

Values

Integrity - Honesty in every action

Commitment - deliver on the promise

Passion - energized action

Seamlessness - boundryless in letter and spirit

Speed - one step ahead always

Key people…

• Kumar Mangalam Birla (Chairman)

• Sanjeev Aga (MD)

• Rajat Mukharjee(VP Corporate Affairs)

History of Idea Cellular LtdFirst Phase(1995-99)1995• Incorporated as Birla Communications Limited• Obtained licenses for providing GSM-based services in the Gujarat

and Maharashtra Circles following the original GSM license bidding process.

1996• Changed name to Birla AT&T Communications Limited following

joint venture between Grasim Industries and AT&T Corporation

1997• Commenced operations in the Gujarat and Maharashtra Circles

1999• Migrated to revenues share license fee regime under New

Telecommunications Policy ("NTP")

Second Phase (2000-05)2000• Merged with Tata Cellular Limited, thereby acquiring original license for the

Andhra Pradesh Circle.2001• Acquired RPG Cellular Limited and consequently the license for the Madhya

Pradesh (including Chattisgarh) Circle• Changed name to Birla Tata AT&T Limited, popularly known as Batata, was

born and was later branded as !dea..• Obtained license for providing GSM-based services in the Delhi Circle

Changed name to Idea Cellular Limited and launched "Idea" brand name• Commenced commercial operations in Delhi Circle.2004• Acquired Escotel Mobile Communications Limited (subsequently renamed

as Idea Mobile Communications Limited).• First operator in India to commercially launch EDGE services 2005.2005• Subscriber base as on December 31, 2005: 6,473,962• AT&T sold its investment in Idea, AT&T merger with Cingular lead to sale

its equity share to Tata and Birlas in equal propotion.

Third Phase (2006-2010)2006• Subscriber base as on December 31, 2006: 12,442,450• After that TATA ventured in CDMA service with TATA indicom that arises

differences between both the partners. (Tata and Birala's).Following that when TATA Indicom applied for license in Mumbai DOT India refuses to give license. (A single company cant operate in a sector with two different operators i.e. Idea and tata indicom)

• Then in 2006 Aditya Birla Group bought out Share of TATAs in Idea cellular.

• Acquired Escorts Telecommunications Limited (subsequently renamed as Idea Telecommunications Limited)

2007• Subscriber base as on December 31, 2007: 21,054,027

• Initial Public Offering aggregating to Rs. 28,187 million and Listing of Equity Shares on the Bombay Stock Exchange and the National Stock Exchange

• Merger of seven subsidiaries with Idea Cellular Limited

2008• Subscriber base as on December 31, 2008: 40,016,153• Idea acquired 9 licences for Punjab, Karnataka, Tamil Nadu &

Chennai, West Bengal, Orissa, Kolkata, Assam, North East and Jammu & Kashmir

• Acquired Spice Communications with the operating circles of Punjab and Karnataka.

2009• Subscriber base as on December 31, 2009: 57,611,872• Idea becomes a pan-India operator.• Emerging Company of the Year - fastest growing mobile operator

in the world’s fastest growing telecom market.

PRESENTLY  Aditya Birla Group holds 49.1% of the total shares of the company.Malaysia based Axiata controls a 14.99% stake in the company.Totalling to 66,726,802 or 15.02% (Approx.) of the

total 444,295,711 mobile connections in India.

Products and Services

• GSM Post Paid,• Prepaid services,• GPRS services, • Data card (NetSetter),• Mobile Tv,• Wireless Internet,• 3G

Promoters

• IDEA Cellular is part of the Aditya Birla Group, India's first truly multinational corporation. Global in vision, rooted in Indian values, the Group is driven by a performance ethic pegged on value creation for its multiple stakeholders

• Aditya Birla Nuvo Ltd. 27.02%• Birla TMT Holdings Pvt. Ltd. 9.15%• Hindalco Industries Ltd. 7.37%• Grasim Industries Ltd. 5.52%• IGH Holdings Pvt. Ltd. 0.08%• Total 49.13%

Expansion of IDEA Cellular…

Expansion of IDEA Cellular…

IDEA Till Dec 2009…

Subscriber base as on December 31, 2009: 57,611,872…

Now Idea covers all 22 telecom circles..

5,500 employees… won ET's Emerging Company

of the Year award for 2009. 3 time winner of GSM

Association Award for Best Billing or Customer Care Solution.

Group Company wise % market share - Jul'2010

Sl. No. Name of Company Total Sub Figures % Market Share

1 Bharti Airtel 139,220,882 29.74%

2 Vodafone Essar 111,465,260 23.81%

3 IDEA 70,748,936 15.11%

4 BSNL 68,065,817 14.54%

5 Aircel 43,296,659 9.25%

6 *Reliance Telecom 16,311,206 3.48%

7 Uninor 6,873,798 1.47%

8 MTNL 4,947,938 1.06%

9 Loop Mobile 2,947,228 0.63%

10 Videocon 2,777,396 0.59%11 Stel 1,423,043 0.30%12 Etisalat 30,023 0.01%

INTERNAL ASSESSMENT

Financial Performance

AnalysisCurrent ratio The ideal current ratio is 1.33. The current ratio of

Idea Cellular indicates its liquidity is in better condition .It indicates that the firm is promising enough and secured to make investments .In comparison to the market leader Airtel.

Debt- Equity Ratio:• It describes the efficiency of the management in financial decision

and forecasting. The debt equity ratio of the company is 0.67 in fiscal year 2009 and 1.84 in the fiscal year 2008. The ratio is slightly higher than the ideal ratio, it means that the company has a satisfactory capital structure and equity is also at an equilibrium condition. The firm has profit scenario and it is in a good condition.

Gross profit ratio• The gross profit ratio is not very high, 15.84% for Mar 2010, this is

because of the increasing cost of production as Idea is expanding and also the increase of competition

Gross profit ratio• The gross profit ratio is not very high, 15.84% for Mar 2010, this is

because of the increasing cost of production as Idea is expanding and also the increase of competition.

ROCE• The ratio of Idea cellular in comparison to Airtel (market leader)

indicates that Idea Cellular is not very efficient in gaining benefits from its asset. Airtel is gaining much more the assets they employed and Idea is lagging far behind.

Earnings Per Share• If earnings per share increases the possibility of a higher dividend

paid by the company increases. The ratio of idea cellular is not very high The company is a good opportunity for investment but still lagging a lot from market leader.

RONW• Idea needs to increase the utilization of the assets as Airtel is

doing to earn more profit and attract investors.

BCG Matrix

• Idea Cellular Limited has a share of 22% (as on July'09) and has growth rate of 18% annually. At Present it is working in 11 service areas, having a customer support of 24 million covering more than 60 % of the total Indian telecom population (Capitaline, 2009). In present Idea cellular has its corporate office in Mumbai, and a registered office in Gujarat. It has its Its circle offices in 17 states. It also has partnership agreements with some famous organizations such as, NDTV and Cellebrum India Pvt. Ltd. for VAS (value added services), and for roaming Bharti Telesoft, for marketing communication it has tied up with Lowe India Pvt. Ltd. and for network, Nokia and Ericson are its biggest partners.

(Bureau E., 2009). So it comes under star.

Strength

• Reputation of Brand

• Increase in Profit margin with high rate

• Financial power

• Market share of Idea

• Technology innovation used in Idea

• Advertising and promotion in Idea

• Strategic agreement with other brands

• High quality network structure.

Weakness

• No Broadband service

• Low coverage in India

• Market leader only in North India

• Direct to Home Service is not available

• Less market share in urban market

Internal Factor Evaluation Matrix

EXTERNAL

ASSESSMENT

Porter’s Five ForcesThreat of rivalry: Lots of competition between telecom companies to be ahead

of each other. There are government companies like BSNL and MTNL. Some private Indian companies like Tata, Reliance and some are foreign companies like Vodafone, spice.

Threat to new entrants: Indian telecom companies facilitates opportunities to foreign

companies in different fields like; VPN, satellite phone calls, 3G, international calls and value added services.

Threat of substitute product and service: Internet telephony is good substitute with cheaper rate it offers video conferencing just like Skype.

 .

• Bargaining Powers of Customer As it is offering services at cheaper rate,

customers loyalty was good earlier but now with the increase of competition.The bargaining power is very high.

• Bargaining Power of Suppliers: Idea cellular consumes iron, aluminum, electric

wires for tower making. The bargaining power of supplier is less.

“PEST Analysis…

::Political::

Stable Govt. in India…Govt. Policies for Sustainable development… Regulations by Govt. of India.

○ Eg. Banning Phones in certain circumstances like emergency.Foreign Trade Regulation..Regulations of T.R.A.I. Environmental protection laws.Taxation policy.Defence regulations.Employment laws.

::Economic::

• Constant GDP of 8% & aiming more…• Telecom Industries is one of the fastest growing

Industry in India (Growth rate 45%, fastest in the world)..

• India’s mobile subscriber base is growing at a rate of 82.2% annually…

• Increase in per capita income of people…• Low mobile Tariffs…• Business Cycles(Boom from 2000 to 2nd Quarter

2007)…• Inflation under control…(~4-5% )

GDP – USD 590 billion

GDP growth rate – 8 %

Services contribution – 54 %

FDI limit not 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.

20062006

GDP – USD 750 billion

GDP growth rate – 8.5%

Services contribution – 60 %

FDI limit is close to 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.

20082008

GDP – USD 900 billion

GDP growth rate – 9%

Services contribution – 60-65 %

FDI limit is expected to be 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc.

20102010

Growth Expected in IndiaIncreasing trend in GDPIncreasing trend in GDP

<<BackFDI: Foreign Direct Investment

::Social-Cultural::

• Demographics trends• Social mobility (Ease of Change in standard & status

if Living)

• Lifestyle changes– Education & Knowledge has made people

conscious about life style...

• Consumerism (tendency to consume more)

• Levels of education• Increasing Working Population

India: Astounding Demographics & Rise in Per Capita

Per Capita Income

393

461519

583

651

0

100

200

300

400

500

600

700

2002-03 2003-04 2004-05 2005-06 2006-07

US

D2

9

48

221

726

9

17

74

285

710

20

33

120

404

613

2001-02 2005-06 2009-10(E)

Rich (Above 115,000)

High Income (57,000 – 115,000)

Consuming class (23,000 – 57,000)

Working class (10,200 – 23,000)

Needy (Below 10,200)

Annual Household Income

(in USD)

Pop

ula

tion

(mill

ion

)

Increasing per capita income coupled with an

emerging middle class has provided the necessary

impetus to consumerism in India

Growth in the higher income categories of India’s population has created an affluent section of society, which has significant level of purchasing power

Increasing per capita income and large population moving into middle class has led to high level of consumerism in India

DEMOGRAPHIC TRANSFORMATION OF INDIA

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::Technological: Tomorrow's technology to enrich today.

• IDEA has tied up with IBM for all it’s IT operations…

• 3G(about to launch…)• Communication is

becoming need of today• Mobiles have become

cheaper…

OPPURTUNITIES• The Indian telecommunication industry is growing at faster rate

• Low penetration, more particularly in rural India.

• The regulatory environment is improving and there is greater clarity in existing rules and procedures.

• New 3G launch

• Growing Income of Indian people

•  

Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as a clear winner, and by 2050, it will have the largest working age population.

Countries worldwide are anticipating a shortage of working population in the future. India is expected to emerge as a clear winner, and by 2050, it will have the largest working age population.

India: Increasing Working Population

-3

0

10

17

31

33

44

64

71

314

-5 45 95 145 195 245 295 345

Stock Position 2005

South East Asia 362

Southern Asia 132

India 691

Africa 500

China 934

Latin America 359

USA 200

Europe 497

Japan 85

World 4,168

In Million

Addition to Working Age Population by 2010

Growth in Global Working Age Population (15-64)

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THREATS

• Intense competition.

• Customers loyalty is low

• Foreign Telecom Company’s entering

• Increasing cost of promotion.

• Increased network cost

External Factor Evaluation Matrix

Analysis of Strategies.

Integration Strategies

• Horizontal:• In 2000, Merged with Tata Cellular Limited,

thereby acquiring original license for the Andhra Pradesh Circle.

• in 2001, Acquired RPG Cellular Limited and consequently the license for the Madhya Pradesh (including Chattisgarh) Circle.

• In 2004, Acquired Escotel Mobile Communications Limited (subsequently renamed as Idea Mobile Communications Limited) & Reached the four million subscriber mark.

• In 2006, Acquired Escorts Telecommunications Limited (subsequently renamed as Idea Telecommunications Limited).

• In 2006, Became part of the Aditya Birla Group subsequent to the TATA Group transferring its entire shareholding in the Company to the Aditya Birla Group.

• In 2008, Acquired Spice Communications with the operating circles of Punjab and Karnataka.

• 2010, acquires 40.8% shares in Spice Communications,

Backward Integration• In 2007, Merger of seven subsidiaries with

Idea Cellular Limited • 100% -- Idea Cellular Infrastructure Services

Limited (ICISL)• 100% -- Idea Cellular Services Limited (ICSL)• 100% -- Swinder Singh Satara & Co Limited (SSSL)• 41.1% -- Spice Communications Limited (Spice)• 100% -- Aditya Birla Telecom Limited (ABTL)• 100% -- Idea Cellular Tower Infrastructure Limited

(ICTIL)• 16% -- Indus Towers Limited (Indus) •  

Differentiation

• Heavy Investments in technology to gain competitive edge:

Idea Cellular invests huge amount in the innovation embedded solution to enhance its technology, network, wireless space and Customer Relationship Management (Our Partners, 2009). For this, they signed a deal of $19.2 million with IBM (USA base Software Production Company). Idea uses IBM webspare application server for data and financial transaction, Oracle Siebel customer data integration for Customer Relationship Management and Supply Chain Management, they use OLTP (Online Transaction Process), CICS (Customer Information Control System) software to optimize the data security, network and mobility management (Idea Portal, 2009). Idea Cellular uses Vehicle Tracking System by GIS (Global

Processing System).

• Aggressive Advertising  IDEA Cellular, formerly Birla Tata AT&T Ltd (BTAL), in a bid to create

awareness for its brand, is set to embark on an aggressive advertising strategy. Idea has planned to spend approximately 7 per cent of our net revenues on advertising. Idea has endorsed Abhishek Bacchan for its promotion. Some of popular ad campaigns such a “An idea can change your life”; “What an Idea Sir ji!” & “save the trees”.

• Distinct Promotional Strategy  The good point of Idea Cellular marketing policy is that it is targeting the

general and poor people of the nations. The ad campaigns represent Idea connection as the solution of the problem faced mainly in the rural area like caste system, absence of school. The campaign is increasing the preference of general people towards Idea Cellular.There is still need for a better and more focused advertising campaigns in their marketing strategy to portray the VAS of the company and efficient network availability.

 • Improved customer Service Idea has been the 3 time winner of GSM Association Award for Best Billing or

Customer Care Solution. •  

• Focus StrategiesIdea cellular has been a bit too focused in the GSM sector. Since the GSM market is highly competitive with the FDIs flowing in & entrance of world players like Vodafone &Docomo, and the market getting saturated mainly in the urban area, Idea should think of diversification by investing in Satellite TVs, Fixed lines & Broad-Band.

Strategy evaluation

Conclusion…

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Save tree campaign

;Walk when u Talk.

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